Students can look at the area under curves in economics to find out total income or consumer surplus. Let’s break it down:
Total Income:
The area under the demand curve shows us the total income when we measure it against how much is sold.
Imagine you have a demand function called . You can find the total income by using this formula:
Here, is the amount sold.
Consumer Surplus:
The area above the price level and below the demand curve tells us about consumer surplus.
You can calculate it like this:
This shows how much extra benefit consumers get when they pay less than what they were willing to pay.
By understanding these ideas, we can learn more about how the economy works and how markets function!
Students can look at the area under curves in economics to find out total income or consumer surplus. Let’s break it down:
Total Income:
The area under the demand curve shows us the total income when we measure it against how much is sold.
Imagine you have a demand function called . You can find the total income by using this formula:
Here, is the amount sold.
Consumer Surplus:
The area above the price level and below the demand curve tells us about consumer surplus.
You can calculate it like this:
This shows how much extra benefit consumers get when they pay less than what they were willing to pay.
By understanding these ideas, we can learn more about how the economy works and how markets function!